RES — RPC, Inc.

Summary of RPC, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Decreased 5% sequentially to $426 million.
• Adjusted Diluted EPS: Reported at $0.04, with adjustments totaling $0.06 due to wireline cable expenses and acquisition-related costs.
• Adjusted EBITDA: $55.1 million, down from $67.8 million, with an adjusted EBITDA margin of 12.9%, a decrease of 230 basis points.
• Operating Cash Flow: $201.3 million; after capital expenditures (CapEx) of $148.4 million, free cash flow was $52.9 million.
• Cash Position: Approximately $210 million in cash, with no borrowings from a $100 million revolving credit facility.

2. Strategic Updates and Business Highlights

• Service Line Performance: Pressure pumping accounted for 27.6% of revenues, with notable declines in various segments, including a 6% decrease in pressure pumping and a 3% decline in wireline.
• Thru Tubing Solutions: Continued success with the rollout of the A-10 downhole motor and the new Metal Max component, which is expected to enhance performance and market share.
• Cudd Pressure Control: Revenue increased by 1% sequentially, driven by well control and snubbing activities.
• Focus on Diversification: RPC is strategically growing less capital-intensive service lines and exploring M&A opportunities while maintaining a strong balance sheet.

3. Forward Guidance and Outlook

• 2026 CapEx Guidance: Expected to be in the range of $150 million to $180 million, with adjustments based on market activity levels.
• Market Conditions: Management noted that while oil and gas prices have improved recently, further increases are needed to stimulate significant customer activity.
• Operational Flexibility: RPC aims to leverage its balance sheet for growth opportunities and maintain financial flexibility to navigate market challenges.

4. Bad News, Challenges, or Points of Concern

• Sequential Revenue Decline: The company experienced a broad-based decline across most service lines, particularly in December due to seasonal weakness and weather impacts.
• High Effective Tax Rate: An unusually high tax rate was attributed to the liquidation of company-owned life insurance policies and acquisition-related costs.
• Market Pressures: The company faces ongoing competitive pressures, particularly in pressure pumping, with concerns about oversupply and pricing discipline.
• Weather Impacts: Early winter storms have affected operations, leading to lost operating days that will impact near-term profitability.

5. Notable Q&A Insights

• Market Outlook: Management is cautious about Q1 2026, indicating that the impact of winter weather is still being assessed, particularly in key regions like the Permian and Mid-Con.
• M&A Strategy: RPC is open to stock buybacks but remains focused on M&A opportunities, particularly in traditional oilfield services, while being patient given the current market conditions.
• Wireline Accounting Change: The decision to expense wireline cables was made to reflect changes in work type and usage, which management believes aligns with current operational realities.
• Pressure Pumping Market: There is no significant improvement in competition or pricing yet, but management is hopeful that consolidation among competitors may create opportunities in the future.

Overall, RPC, Inc. is navigating a challenging market environment with a focus on maintaining financial flexibility and exploring growth opportunities while addressing operational headwinds.